Perhaps the most daunting debt collection practice is wage garnishment, a process by which your creditor can takes your wages from your paycheck in repayment of a debt. Can any creditor garnish wages when you fall behind on your payments, for example, on credit cards or other personal debt? The short answer is yes. But there is a bit more to it than that.
Preliminarily, this blog related to all debts other than purchase money home loans. Under California’s anti-deficiency laws, mortgage lenders cannot sue you personally on account of a loan that you used to purchase your home. If the home loan was a home equity loan taken out subsequent to the purchase of your home, for example money you pulled out from your home to pay for bills, then your mortgage lender can personally sue you. So the remainder of this blog refers to loans other than purchase money home loans.
When you fall behind on your credit card payments or other debt payments, your creditors will first call you repeatedly, often daily, asking for payment. Your creditors will then transfer your file to a third-party debt collector who will call you incessantly, in the morning, during the day, at dinner, and late at night, often using intimidation tactics. When the debt collector’s tactics, often illegal and harassing collection practices, don’t result in bringing your account current, your creditors will resort to suing you.
When a creditor files a collection lawsuit against you, frequently you will not respond because a response typically requires retaining a lawyer, paying a lawyer fee, paying court filing fee to file your response, and in the end you will probably lose the lawsuit since it is a lawsuit to collect based on money that you actually borrowed. When you don’t respond in the required time, usually 30 days in most courts, your creditor will win the lawsuit by default, which means it will win automatically because you did not respond. Your creditor then is awarded a judgment and can proceed to garnish your wages to pay off your judgment debt owed to your creditor.
Even if you were to hire a lawyer, pay a lawyer fee, pay a court filing fee, and appear and defend the collection lawsuit, you will only delay the inevitable. In a typical collection lawsuit, you will lose the lawsuit because you did, in fact, receive the money or credit that was extended to you. Your creditor will obtain a judgment against you and will be able to garnish your wages to pay off the judgment debt.
So, yes, your creditor definitely can garnish your wages in order to forcefully have your debt repay by deducting money from your wages received from employment. What can you do about it? Well, you have the option of filing bankruptcy to eliminate the debt and thereby avoid any wage garnishment. Even if a garnishment has started, filing for bankruptcy protection will put an end to the garnishment and restore your full income to pre-garnishment levels so that you can resume being able to pay your bills.
